Star Combo Pharma Ltd

Star Combo Pharma to acquire natural health, food and beauty products company Bio-E

The company has a substantial pipeline of future product launches to drive growth in the 2020 financial year.

The cash consideration will be funded through a capital raising of $51 million

Star Combo Pharma Ltd (ASX:S66) has entered into a share sale agreement to acquire 100% of natural health, food and beauty products company Bio-E Australia Pty Ltd for $60 million plus a potential earn-out.

The initial consideration of $60 million will comprise a combination of cash ($42 million) and Star Combo shares (30 million) at an issue price of 60 cents per share.

The potential earn-out payable to the vendors of Bio-E will be based on a multiple of 5.5 times the EBITDA growth in Bio-E above $15 million in the 2020 and 2021 financial year.

A “transformational acquisition”

Star Combo chairman Richard Allely said: “This is a transformational acquisition for the company and accelerates our transition from a contract manufacturing business to a fast growth, high-margin branded business.

“We first met Bio-E when we developed and formulated the new Sleep Diet product for them.

“Both companies quickly recognised the significant synergies by combining our business and brining our complimentary skill sets together.”

“Excited about significant growth opportunities”

Allely added: “We are excited about the significant growth opportunities that both businesses have going into financial year 2020.”

Star Combo is also undertaking a capital raising of up to $51 million to fund the cash component of the consideration payable under the SSA, transaction costs and working capital.

The raising comprises:

  • A $50 million placement to professional and sophisticated investors at 55 cents per share; and
  • A share purchase plan to raise up to $1 million at 56 cents per share to existing Australian and New Zealand investors.

The Melbourne-based company provides locally sourced natural health, food and beauty products to customers.

Key products include fermented or probiotic drinks, pure Australian honey, natural skincare and health supplements.

Quick facts: Star Combo Pharma Ltd

Price: 0.46 AUD

Market: ASX
Market Cap: $39.81 m


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